Monthly Archives: January 2013

AVERAGE HOMEBUYING DEPOSIT

AVERAGE HOMEBUYING DEPOSIT IS NEARLY £26,500

•      But the biggest deposit is five times the lowest in England and Wales

•          Castle Trust urges buyers to look at all saving options

 (Grandparents, uncles, aunts  god parents and others can help with average homebuying deposit at minimal long term costs)

Homebuyers need to find a deposit of nearly £26,500 to buy a home in England and Wales – but, depending on where they are looking to buy, the deposit can be as much as five times bigger than elsewhere, new analysis1 from housing investment and shared equity mortgage provider Castle Trust shows.

 

Its analysis of the top 30 cities and regions in England and Wales shows the average deposit needed to put down 20% of the purchase price is £26,468 – but it can be as high as £72,760 or as low as £14,470.

Homebuyers in London need an average of £72,760 in savings or equity to secure a 20% deposit – and the average deposit there is almost double the second most expensive area to buy, with deposits in Reading at £39,789.

In Blackburn, the deposit is a fifth of the London average at £14,470 and more than £1,200 lower than Blackpool, the next most affordable at £15,707.

Castle Trust, which aims to provide a safer way to buy a home and a safer way to invest in property, is advising homebuyers – and parents or family who may be helping children on to the housing ladder – to consider all their options when raising deposits.

 

Sean Oldfield, chief executive officer, Castle Trust said: “Parents and grandparents are being called on more and more to help children with their first deposit and the proportion of the population owning their own home without family help is likely to continue to fall.

“Aspiring homeowners need alternatives to borrowing from family which is why the Government has launched a range of initiatives including NewBuy and FirstBuy.

Avergae HomeBuying Deposit

“However, private companies need to play a role as well in offering innovative and affordable ways to help those who want to buy homes and Castle Trust is determined to play its part with housing investment and shared equity products.”

 

The cities and areas requiring the lowest and highest deposits for homebuyers are outlined below.

Lowest deposits                                                Highest deposits

Blackburn (with Darwen) £14,470 Portsmouth £28,688
Blackpool £15,707 Southend-on-Sea £30,487
Oldham £16,386 Milton Keynes £30,654
Hartlepool £16,934 Bournemouth £34,493
Bolton £18,492 Gloucestershire £34,607
Manchester £18,547 Cambridgeshire £36,030
Liverpool £18,767 Kent £36,590
Bradford £18,807 Exeter and Devon £37,605
Wolverhampton £19,718 Reading £39,789
Darlington £20,767 London £72,760

 

Castle Trust is offering a new type of shared equity mortgage, called Partnership Mortgages, which enables homeowners under 55 to issue equity in their home, as well as investment products, called HouSAs, which enable savers to invest efficiently in the national housing market via their SIPP or ISA.

 

Partnership Mortgages are for 20% of the value of an owner occupied home alongside a repayment mortgage of up to 60% from a traditional lender and a deposit or equity of at least 20%.  There are no monthly commitments on the Partnership Mortgage and Castle Trust will share 40% of any profit made by the homeowner when they sell or come to the end of the mortgage term.  The company will also share 20% of any loss made on a home bought with a Partnership Mortgage.

 

Castle Trust’s HouSAs are suitable for ISAs, Junior ISAs and SIPPs. Its Income and Growth HouSAs can be taken out for terms of three, five or ten years. The Income HouSA tracks any rise or fall in the Halifax House Price Index and also pays an annual income of between 2% and 3%, depending on the investor’s chosen term.

 

The Growth HouSA offers a multiple of between 1.25 times and 1.7 times any increase in the Halifax House Price Index and limits the loss to between 0.75 times and 0.3 times any decline. Both HouSAs are available for investments of between £1,000 and £1million.